CZK: EUR/CZK Sinks Further After Returning Below 50-DMA
EUR/CZK had a look above the 50-DMA (24.348) earlier this week, but pulled back thereafter, hit by the double-whammy of hawkish CNB talk and upbeat GDP data. The rate last deals -0.012 at 24.320, with bears looking for a sell-off toward recent cycle lows printed just shy of the 24.2 mark. A clean break above the 50-DMA would bring the 100-DMA (24.485) into view.
- As a reminder, advance Q3 GDP figures provided a solid upside surprise yesterday, while CNB's Seidler said that interest rates will likely remain unchanged for longer amid sticky service inflation. The central bank then went into its blackout period ahead of next week's monetary policy decision.
- The tripartite ANO-led coalition will unveil its policy statement on Monday, but has already given a glimpse of its plans. ANO reaffirmed its intention to tackle grey economy, introduce a fairer pension indexation system, and secure state control over CEZ's generation assets.
- CZGBs trade on a softer footing across the curve, with the longer end underperforming. The PX Index has added 0.6%, refreshing all-time highs in the process. CEZ is the second-best performer in the index.
- Czechia's M2 money supply expanded by 3.2% Y/Y in September, rebounding off a cyclical low of +2.8%. CNB Governor Michl had said that he regularly monitors the three-month moving average of M2.
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EUR: Phase of EUR Weakness Stands Out, EUR/USD Within Range of Sizeable Strike
EUR selling pressure helps tip EUR/USD, EUR/JPY and EUR/GBP through to new daily lows. Little headline flow or news to trigger the phase of EUR weakness here, although it does coincide with Bund futures creeping back to flat on the day, as mentioned above. Gov shutdown risks and the BoJ Tankan survey have been the primary drivers so far today, but the latest phase of EUR weakness stands out somewhat - but looks largely flow driven at this stage.
- Futures markets show a decent pick-up in interest in EUR selling 1118BST, which marked some of the best activity of the session so far, even including the price action across the PMI and HICP releases. Over 3k EUR Z5 futures contracts traded into the session low for a cash equivalent of just below E500mln.
- The fade in price tips spot toward some of the more sizeable options interest rolling off at today's cut, with E2.4bln expiring between $1.1700-10 today.
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SFIM6 96.60/96.80 call spread paper paid 3.5 on 8.6K. Desks note paper bought 9K at the same price on Tuesday.
